The greenback will be again on backtrack

It was, no doubt, a great come back when the greenback got back the lost glory during April. But some currency experts are of the view this glory is transient and it will not prove long lasting.

Strategic Business

All we can say the dying dollar showed some signs of life during the previous month but it was not a complete recovery .Only the coming days can tell, what is gong to happen but predictions are not going in favor of the greenback.

During April we saw the greenback dropped record low against euro then things began to change and the greenback recovered a little bit during the recent weeks and it helped those expectations that the Federal Reserve’s insistent rate-cutting campaign might have reached at end.

The declining U.S. economy, a gigantic trade deficit and high rates of interests of foreign central banks are convincing several currency experts to consider the dollar under pressure at least during this year.

Retail sales drive almost two thirds of economic activates in the in the U.S. but a declining trend was also observed in retail sales during the last month. Similarly, manufacturing activities fell quite sharply than they were expected in April.

Housing market is also under pressure and unemployment is on the rise in many States.
But at the same time this weak dollar proved very helpful to enhance the U.S. exports as The U.S. made goods become attractive for the foreign buyers .But still the country’s present financial deficit is quite massive.

A recent Treasury International Capital report explains that in March net foreign purchases of long-term U.S. securities was around $80.4 billion while it was $64.9 billion in February and $56.7 billion in January.

Similarly, future markets recommend that if the Govt. takes action during the coming months, it will be a rate climb to control inflation and it will also improve the greenback.
According to experts Dollar can get back those high levels only if trade deficit shrink significantly and the Govt. will have to raise interest rates forcefully to contest inflation.

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